THE Scottish economy is on track to return to pre-recession levels of output next year, according to a new report.
In his latest State of the Economy briefing, the Scottish Government's chief economist, Dr Gary Gillespie, said growing household spending, an improving jobs market and a small boost from exports over the past 12 months provided grounds for some optimism.
His report said there was potential for Scotland's recovery to gain traction and return to levels of output last seen before the 2008 crisis.
The forecast was welcomed by Finance Secretary John Swinney and the Scottish Conservatives but dismissed as complacent by Scottish Labour.
The new report highlighted signs of economic growth in Scotland and recent rises in employment and falls in unemployment, and suggests the recovery is gaining momentum.
The process has been driven by increased household consumption, it noted.
It added: "The growing recovery in the UK, US, and more recently in the euro area also spell positive news, as they are Scotland's most important trade partners.
"Looking ahead, as in the rest of the UK, sustaining the recovery in Scotland into the medium term will require an improvement in underlying competitiveness, linked to a sustained pick-up in productivity and real wages.
"Overall, the outlook for next year is more positive than 12 months ago."
However, it warned of "ongoing headwinds" and said that productivity would need to improve if economic growth was to be felt by workers in terms of higher pay and rising employment.
The report also highlighted the need for greater private sector investment and more overseas trade as key factors for a sustained recovery.
Mr Swinney said: "There will still be challenges for firms in specific industries and for some households as the recovery progresses. There will be no let-up in the Scottish Government's commitment to securing economic growth, which is why in this spending review period we are investing £10 billion in capital projects, building homes, schools and facilities to support the economy.
"As Scotland's Future (the SNP's White Paper on independence) outlines, it is only with the full powers of independence that we can build a wealthier, fairer and economically sustainable Scotland ensuring that everyone benefits from our natural wealth and talent."
Scottish Conservative finance spokesman Gavin Brown said: "While we will need to see how things play out, these predictions are positive for the UK as a whole.
"George Osborne's recent autumn statement showed that Scotland and the UK are on the right path and an encouraging trajectory."
However, Scottish Labour said the fragile recovery had so fair failed to benefit ordinary Scots.
Finance spokesman Iain Gray said: "This script could have been written by George Osborne.
"For the families who had to rely on food banks for Christmas dinner or pay day loans to buy presents for their families, the boasts from the SNP Government about the performance of the economy will mean nothing.
"A recovery based on low pay and zero-hour contracts is no real recovery at all. A recovery only for the rich is no real recovery either. This shows astonishing complacency from an SNP Government that takes credit for the good and blames the bad on others."
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